In almost five years, the Greater Cambridge City Deal and Combined Authority have spent £40m+ on transport projects, yet what is there to show for it? A few miles of cycle path, but mostly stacks of reports of middling to poor quality. So where does it all go wrong?
Byzantine political and governance structures, unrealistic demands on lay councillors, and a lack of skills to communicate and engage widely with the public on complex, technical, and emotionally-charged issues, are all partly to blame.
But perhaps the biggest problem stems from an accounting practice that makes a hard distinction between capital and operating expenditure. Capital buys a one-off product or service, e.g. a bridge or a transport study. Operating expenditure buys an ongoing service, e.g. someone’s salary or cyclical road maintenance.
Local government has access to hundreds of millions of pounds for capital projects, but is desperately short of revenue to fund operating expenditure. Yet what needs investment most urgently comes out of the operating, not capital budget: repairing roads, pavements and cycleways, including trimming back vegetation; lighting rural pathways; subsidising socially desirable bus services and fares; co-ordinating bus services for schools; providing information and personalised advice about transport options; offering financial assistance for season tickets or buying an e-bike; etc.
Capital investment is not inherently better: it’s slow, risky, has a finite life, and has to be paid for over many years (with future taxes); it almost always comes with additional (often unbudgeted) operating costs. Operating investment can often yield a higher benefit-to-cost ratio immediately – which should appeal to politicians.
Building a £100m busway, incurring £1m/year in maintenance expenses, costs roughly £3.4m/year for 40 years (assuming 2% inflation and interest) – before a single bus runs on it. That same money could run 25 buses from 6am to 11pm every day of the week, carrying in the order of 11 million passenger-journeys a year – fare free! (In practice this would require a franchise contract.)
Can central government please set up mechanisms to make long-term revenue grants, based on sound business cases and cost-benefit analyses, separate accounting and annual performance reviews?
This article was first published in the Cambridge Independent on 9 January 2019.